Incident: The company announced that it plans to acquire 100% of the shares in Jimei, Zhengzhou in cash, and the transfer prices for 70%/18%/12% of the shares in Jimei, Zhengzhou are 1.08/0.28/0.19 billion yuan respectively, totaling 155 million yuan. PE calculated from the net profit and purchase price of the organization in 23 years is 20.14X and PS is 1.46X (PE calculated by Wuhan Wuzhou/Wuhan Han Yichen's 2023 net profit is 16.1/10.2X, respectively); After completion, Beijing Langzi Medical Management will hold 100% of the shares in Jimei, Zhengzhou, and Jimei will be included in the scope of the company's consolidated statements.
Jimei, Zhengzhou specializes in medical and aesthetic services. It has been approved by the Henan Provincial Department of Health as the No. 2 cosmetic specialist hospital, with a total business area of 6586 square meters and departments such as plastic surgery, minimally invasive aesthetics, and cosmetic dermatology. The core consumers are mainly women, and customers are concentrated between the ages of 25 and 45 (65%).
The scale of the organization's revenue has grown steadily, and profitability has recovered significantly. Zhengzhou Jimei's revenue for 22/23 was 0.69/106 million yuan, up 52.7% year on year, and net profit was -0.17/0.08 billion yuan respectively, reversing losses year on year. 22/23 net interest rates were -25%/7% respectively, which is expected to boost the company's medical and aesthetic business profit performance. According to the company's forecast, Jimei Zhengzhou is expected to achieve revenue of 1.15/1.25/1.33/142/149 million yuan in 2024-2028, achieving net profit of 0.11/0.13/0.15/0.18/0.19 billion yuan Net interest rates were 9.1%/10.3%/11.5%/12.5%/13.0%, respectively. Zhengzhou Jimei's net profit for 2024/2025/2026 (refers to the target company's net profit after deducting non-recurring profit and loss). The performance commitment is: net profit for 3 years shall not be less than 1054/1282/15.29 million yuan respectively, with a cumulative total of not less than 38.65 million yuan, which is expected to continue to increase the company's profit.
Gradually moving from the southwest to central China, the national layout of medicine and aesthetics is becoming more and more perfect. Based on the model of incubating extracorporal M&A funds and incorporating stable profits from institutions into the body, the company continues to improve the national layout of medical and aesthetic institutions. Successive layouts in the provincial capitals of Kunming, Wuhan, and Zhengzhou have helped expand the group's scale effect and brand volume, and achieve further improvement in profitability under group management.
Profit forecast and investment rating: The medical and aesthetic business adheres to an epitaxial and endogenous expansion layout. Following the merger of Wuhan Wuzhou & Wuhan Han Chen, the acquisition of Jimei, Zhengzhou will help continue to improve the national layout of medicine and aesthetics, and will also increase profits. It is expected that in the future, as the profits of new institutions climb and the group scale effect becomes more prominent, the profitability of the medical and aesthetic business may continue to improve. We predict that the company's net profit for 2023-2025 will be 237/3.09/353 million yuan, respectively, and the corresponding PE will be 32/25/21X, respectively, maintaining an “increase in holdings” rating.
Risk factors: Risk of public opinion in medical and aesthetic institutions, increased competition in the industry, and the recovery of consumption power falls short of expectations.